Overview

The Stamp Duty Land Tax (Reduction) Bill aims to reduce the amount of Stamp Duty Land Tax (SDLT) payable on the purchase of residential properties in the UK. The changes affect the rates and thresholds for SDLT, providing tax relief for homebuyers.

Description

This bill amends the Finance Act 2003 to lower SDLT rates for residential properties. Key changes include:

• New SDLT rates: The bill introduces a new SDLT rate structure. For properties up to £250,000, the rate will be 0%, properties between £250,000 and £925,000 will be taxed at 5%, £925,000 to £1,500,000 at 10%, and properties above that will be taxed at 12%. These rates are different for additional properties and those purchased under the First Time Buyer scheme. See details below.
• Additional Dwellings: Higher SDLT rates apply to the purchase of additional residential properties. The bill lowers these rates as well, making them 3% for properties up to £250,000, 8% for properties between £250,000 and £925,000, 13% for properties between £925,000 and £1,500,000, and 15% for properties above that.
• First-Time Buyers Relief: The relief threshold for first-time buyers is increased from £500,000 to £625,000. The 0% rate will apply to properties up to £425,000, and 5% will apply to the remainder, up to the £625,000 limit.
• Effective Date: The changes will apply to land transactions with an effective date on or after 23 September 2022.

Government Spending

The bill is expected to reduce government revenue from SDLT. Exact figures are not provided in the bill itself, but it will significantly impact government tax revenue, as the reduction in the tax rates will decrease the amount of tax collected.

Groups Affected

• Homebuyers: Most homebuyers will benefit from lower SDLT, particularly those purchasing properties in the lower price brackets. First-time buyers will also see an increase in the relief threshold.
• UK Government: Will experience a reduction in tax revenue collected via SDLT.
• Property Developers and Sellers: Potential increase in demand due to lower tax burdens and may influence market pricing and affordability.

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